Ethereum kicked off the trading week with a 4% surge, opening at $2,928 on May 13. However, despite this positive start, recent trends in ETH 2.0 staking indicate potential downsides in the future.
In a significant milestone, Ethereum surpassed one million node validators in May 2024, just one year after the Shappella upgrade. This upgrade facilitated Ethereum’s transition from Proof-of-Work to Proof-of-Stake consensus, allowing ETH holders to earn passive income and secure the network by staking their coins.
The number of active node validators on Ethereum’s Beacon chain now stands at 1,015,570, as of May 13, 2024. These validators have collectively staked around 32.5 million ETH, which is equivalent to approximately $96 billion.
The decentralization of staking power was a major concern during Ethereum’s transition to PoS. However, the achievement of one million unique stakers significantly alleviates these worries, providing reassurance to investors interested in the long-term prospects of the ETH project.
Nevertheless, in the short-term, the situation may differ slightly. A closer examination of another crucial metric reveals that ETH has struggled to attract new stakers since the Bitcoin halving.
The chart depicting the number of stakers entering and exiting the Ethereum validator queue shows a decline in new stakers since April 16. Only 704 unique addresses joined the Ethereum staking queue on May 12, representing a 98% decrease from the peak recorded on April 16.
This decline in new entrants can be attributed to the fear of a cryptocurrency market crash following the Bitcoin halving on April 20. Additionally, since April 16, ETH price has experienced a 13% dip.
While Ethereum reaching one million validators is a significant milestone for the network’s future viability and decentralization, the prolonged decline in new entrants could potentially have a bearish impact on ETH’s short-term price action.
At the time of writing, Ethereum is trading around $2,960 on May 13. However, the drastic drop in new staking inflows puts ETH at risk of breaking below the $2,900 level in the near future.
The lower-limit Bollinger band technical indicator suggests that Ethereum bulls may find initial support at the $2,847 level. However, if this support level fails to hold, a breakdown below $2,800 may be imminent.
On the other hand, if market sentiment turns positive due to upcoming US CPI and PPI inflation reports, bulls could aim for a rebound towards $3,200. However, the significant sell-wall at the $3,063 level poses a major obstacle in the short-term.
It is important to note that this content is informational and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to conduct thorough research before making any investment decisions. The Crypto Basic is not liable for any financial losses incurred.